Following a freefall in first half earnings [WAMN: 06-Sep-02], Cordiant Communications announced Friday radical measures to restore previous levels of profitability.
The wraps were removed from a new integrated global entity: The Bates Group - incorporating the Bates Worldwide advertising network, direct and promotional marketing arm 141 Worldwide, branding and design specialist Fitch:Worldwide and Healthworld, a global provider of strategic marketing and communication services to the healthcare sector.
Although the new group will present itself as a single shop, the individual brands will remain – initially at least – to enable clients to pick and mix the services they need. The integration, along with other unspecified cost cutting measures, will incur additional expenses of around £27 million ($42.06m; €42.90m) in the second half of 2002, before yielding dividends in 2003.
Said outbound ceo Michael Bungey: “Our strategy is to deliver an integrated, media-neutral, broad-based communications capability. This is what clients tell me they want.
He continued: “It’s a bold strategy that will deliver further efficiencies across the group, as well as a unique platform from which to generate increased revenue.” However, he refrained from mentioning anything as vulgar as staff layoffs, although those are clearly inevitable.
Other Cordiant properties such as German ad agency group Scholz & Friends, Far Eastern group Diamond Ad and PR network Financial Dynamics ain’t broke and are not being fixed. Nor do insiders believe they will be put up for sale.
The announcements of Bungey’s impending departure and the revamp did little to enhance Cordiant’s share price on the London stock exchange. This closed Friday marginally up on the day at £0.495. One week earlier shares stood at £0.555 – and two years ago at over £4.00.
Data sourced from: BrandRepublic (UK); additional content by WARC staff